Innovation within the Payments Space in Nigeria

by Editor

March 5, 2018 | 5:41 pm
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All solutions implemented to address specific problems trace back their roots to a phase when it was just a concept with potentials to effect a change; what is intriguing about this new innovation is how what was supposed to revamp the supply chain within the Fast Moving Consumer Goods “FMCG” Industry in Nigeria can address the accountability eCommerce merchants in Nigeria are struggling with.

Head of Product “Abraham Ezeadiebuo” at Safeonline, fintech based in Lagos behind the innovation recounted the story behind it citing the initial goal was to provide a seamless replenishment process for retail outlets selling basic amenities needed by the consumer populace; ensuring only entities responsible for the movement of goods were left as the sole middle men fostering direct relationship between Retailers and Manufacturers. Internal data from a major FMCG player shared with its partners on the work needed to be done to expand its distribution network was what triggered this quest. The data highlighted the fact that due to the uncontrolled dispersion of retail outlets within the country well over 65% of active retail outlets at the time data was presented independently restocked items and could not qualify for line of credit. From the FMCG perspective this meant its own sales force had to get across to these retailers and its haulage partners had to extend their coverage to areas where these retailers where located.

Entities responsible for haulage operate independently as well as manage their own costs consequently are into multiple partnerships where they play a role in distribution which result in occasional breaches in service level agreements with regards delivery time. The cause of these breaches in some cases is entirely beyond the control of the haulage companies but it still does not help the fact that when they do occur the retailer money is tied down and potential revenue that could be made on item sales is lost as no new stock is available to meet consumer demand. Also reconciliation and detailed reporting on funds collected internally is supported by large back office operations introducing its own elements of data redundancy.

The implementation plan encompassed building a web based solution that would effectively manage collections, disbursements, provide detailed reporting, support order tracking and increase accountability of the haulage partners. The process of stock replenishment is centred around delivery of items which is time bound once payment from FMCG is confirmed goods are expected to be picked up and delivered to the retailer within the stipulated duration. The only way to boost accountability with the haulage operators was to ensure that each delivery trip was tied to compensation that could be realized at the point of delivery instead of the arrangement that saw them chasing account receivables as they accumulated operating costs in managing their fleet. This meant the solution also had to have a robust system that could effectively manage splitting of funds across the numerous partners needed to ship goods and a trigger mechanism to confirm successful delivery to process compensation for the haulage operator in real-time. From the FMCG perspective once a retailer was part of its distribution network projected revenues based on historic demand was defined and role of sales representative is to look for ways to increase this cumulative value thus the added benefit of making retailer funds readily available in the event goods would not arrive on time on some delivery trips was a way to score points in relationship management.

So the assembled team at Safeonline built the entire service to encompass all the features the web based solution will support and it dawned on the team they could resolve a growing concern elsewhere with the successive demise of the growing list of eCommerce merchants. It was revealed that 98.2 % of comatose going concerns within eCommerce struggled to effectively manage accumulating operating costs from supporting pay on delivery. This problem was greatly exacerbated by the high level of unpredictability in receiving any form of compensation for their delivery effort. This led to addition of new features that would address this issue and ensure that an eCommerce merchant was adequately compensated for its delivery effort even if the consumer chose not to pay for the delivered item. The perceived benefits to the FMCG is also something online merchants would enjoy in addition to the fact that since funds were locked down before delivery commenced the need to handle cash or carry a point of sale terminal was completely eliminated.

What was meant to optimize a process elsewhere found expression in an Escrow Service that merchants can use for payments on websites, marketplace and auctions; called Cash Vault. Head of Product at Safeonline cited that the successive demise of start-ups within eCommerce in Nigeria can take an opposite trend in the positive direction if merchants are provided with tools to effectively manage their operational costs coupled with the ability to inherently gain consumer trust. This will enable a merchant reallocate more resources in providing value added services to consumers which will lead to more business growth.
Safeonline offering merchants the opportunity to enjoy a free trail of Cash Vault to commemorate the launch and all merchants can take full advantage of this benefit by subscribing to receive Cash Vault newsletter.

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by Editor

March 5, 2018 | 5:41 pm
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